By Kit Chellel, Bloomberg News
The cost of hiring a top London lawyer has risen to more than 1,000 pounds ($1,445) an hour, meaning only major companies can afford the biggest law firms, according to a research group.
The average hourly fee charged by partners in the city’s biggest and most profitable firms in 2015 was 850 pounds, and peaked this year at a record 1,100 pounds, or 18 pounds per minute, according to the report produced by the Centre for Policy Studies, a free-market think tank. In 2005, the average rate was 674 pounds per hour, adjusted for inflation.
“Those seeking to comply with U.K. legal procedure are forced to pay extremely high costs to do so –- high enough to restrict access to law, particularly for smaller business clients,” the CPS report said. A lack of transparency on fees and little competition at the elite law firms contributed to the cost increase, according to the author, lawyer Jim Diamond.
“It’s the fear,” said Diamond, who specializes in cost disputes between attorneys and clients who carried out the research . “You have got to use the best. The numbers become the last thing you discuss.”
The biggest London firms don’t publish information on their hourly rates, so Diamond compiles his data by surveying clients.
A 2013 lawsuit between Alexander Vik and Deutsche Bank AG left the Norwegian entrepreneur with a 36 million pound legal bill after he lost in London courts. In the U.K., the loser pays the winner’s legal costs. The Bank of England faced criticism last year after spending 2.9 million pounds on lawyers in an eight-month investigation into what its staff knew about foreign-exchange market rigging.
Firms have been able to raise fees because of demand for financial services advice, said David Carbery, a recruiter specializing in legal and compliance at Shadowhound.
“Banks want the best advice and they’re happy to pay for it,” Carbery said. “It’s not surprising that this is reflected in the fees.
Spokesmen for the U.K. magic circle firms — Clifford Chance, Linklaters, Allen & Overy and Freshfields Bruckhaus Deringer — declined to comment.
Rates at London second-tier firms were as high as 800 pounds an hour in 2015, according to the CPS report. Regional U.K. law firms charged as much as 500 pounds per hour for a partner.
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